Get 5% from savings – without a savings account

Category:
Banking

Updated:
12/05/2017
First Published:
13/03/2014

MONEYFACTS ARCHIVE

This article was correct at the time of publication. It is now over 6 months
old so the content may be out of date.

Savers have long been suffering from paltry savings rates, with it becoming increasingly difficult to find an account that can offer a meaningful return. Case in point – currently, the top-paying easy access account offers just 1.50%, with returns of 3.00% only being achieved if you're willing to lock your money away for a considerable length of time.

Savers are demanding change, and with the prospect of rate increases not looking likely in the foreseeable future, a surprising hero has come to save the day – the humble current account.

Over the last year or two the current account market has become awash with accounts offering impressive rates of interest for in-credit balances, meaning there's now no longer the need to tie your money up in fixed rate bonds just to secure a decent return.

The latest to hit the headlines is the Plus account from TSB, due to be launched at the end of the month, offering a market-leading 5% on balances up to £2,000. Crucially, unlike some other accounts offering similar rates, there's no end date to the deal and no need to switch over direct debits and standing orders, and the minimum monthly deposit of £500 is much more achievable than some other accounts which demand £750, £1,000 or even more.

There's no fee either and customers can have up to two accounts per person, and in fact the only requirement is to register for online banking and paperless statements – a small price to pay for such a great deal.

"The account is very straightforward and is likely to attract not only banking customers after a fee-free account, but also savers who want to make the most of their money," said our very own finance expert Rachel Springall, who also points out that it's the one-year anniversary of Nationwide's FlexDirect account offering 5% interest on balances up to £2,500 (subject to a minimum monthly deposit of £1,000), a deal limited to 12 months – meaning customers who are coming to the end of that offer period could well be tempted to opt for TSB to keep getting the same return, beating most savings accounts out there today.

The Santander 123 Current Account could be another alternative for those seeking a high interest account, which offers tiered rates of interest depending on the balance – up to 3% on balances between £3,000 and £20,000 – as well as cashback deals and additional incentives, subject to a minimum monthly deposit of £500 and a £2 monthly fee.

Other current accounts paying high interest rates include Clydesdale and Yorkshire banks, with Current Account Direct offering 4% on balances up to £3,000 (so long as £1,000 is deposited each month), and from there you can find accounts offering 2.00% and under, perhaps not setting the world on fire but still far better than a lot of savings accounts currently available.